Palestinian medical officials identified the two men killed along with al-Saadi as Mohammed Abu Naaseh, 34, a local al-Quds Brigades leader, and Alaa al-Breiki, 28, the driver of the vehicle in which they were travelling.
Palestinian security sources said two civilians, including a 12-year old girl, were wounded in the Jenin raid.
Thousands of Palestinians marched in the city on Wednesday in protest against the killings.
After the undercover unit's operation, 20 Israeli military vehicles raided the Jenin refugee camp, Ali al-Sumodi, Al Jazeera's correspondent, said.
Meanwhile in Nablus, Israeli troops have resumed a hunt that began on Sunday for Palestinians on a list of wanted people, Palestinian security sources and the Israeli army said.
"The land of Israel belongs to both Jews and Palestinians - as long as there are people who reject this fact, the conflict will never be solved"
Iskander, Boston, US
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Palestinian security sources said dozens of military vehicles and hundreds of Israeli troops poured into the old town on Wednesday and surrounded its three main hospitals.
They then declared a curfew, confining about 50,000 people to their homes.
The Israeli military spokesman said the objective still is "to damage terrorist infrastructure in the city".
That involves arresting wanted men and capturing weaponry and explosive materials, he said.
The military incursion is the biggest Israel has mounted in the occupied West Bank in months.
Palestinian security sources said Israeli forces detained a number of relatives of wanted men, including the mother of Amin Lubbadeh, a member of al-Aqsa Martyrs Brigades, which is affiliated to the Fatah movement of Mahmoud Abbas, the Palestinian president.
In the Gaza Strip, Abu Ahmad, an Islamic Jihad spokesman, said the group would retaliate for Wednesday's killings in Jenin.
|Thousands are confined to their homes as Israel|
strikes Nablus's "terrorist infrastructure" [AFP]
In a text message sent to reporters, he said: "This new crime will not pass without tough punishment."
Islamic Jihad carried out a suicide bombing that killed three Israelis in January and has refused to commit to a Gaza truce which most armed groups agreed to in November.
The group said it wanted the truce to extend to the West Bank.
The Israeli army said a 42-year-old Palestinian man, Anan Tebe, was killed on Sunday when their troops fired at figures moving on the roof of a building where they had seen armed men and where they later found a weapon.
Palestinians said he was unarmed and was shot from a passing jeep.
Source: Al Jazeera and agencies